Corporate governance and banking performance in the Middle East and North Africa region: An implication for the board of directors

Download This Article

This work is licensed under a Creative Commons Attribution 4.0 International License.

Abstract

In regions susceptible to external economic shocks, such as the Middle East and North Africa (MENA), corporate governance plays a pivotal role in maintaining financial system resilience. Despite facing significant economic challenges over the past 15 years, including oil price fluctuations and global financial crises, certain MENA states have achieved economic prosperity through effective policies. The United Arab Emirates (UAE), with its stable political and economic environment, stands out as a diverse and growing economy. However, many MENA nations lack adherence to established corporate governance standards. While the 2016 MENA-OECD Ministerial Conference endorsed corporate governance measures, their impact on state-owned enterprises and financial institutions remains under evaluation. This paper investigates the performance and corporate governance practices of UAE and MENA banks, with a focus on determining if UAE banks exhibit superior governance compared to their regional counterparts. Key areas of inquiry include ownership structures, accountability mechanisms, and reporting practices, analyzed through various theoretical lenses. Utilizing static panel regression techniques, the study assesses data from UAE and MENA banks, highlighting the significance of corporate governance in differentiating bank performance. The findings underscore the positive impact of corporate governance on UAE banks’ Tobin’s Q, contributing to a nuanced understanding of corporate governance dynamics in the MENA region and facilitating informed policy decisions for economic stability.

Keywords: Corporate Governance, Bank Performance, Corporate Governance Mechanisms, Tobin’s Q, ROA, ROE, MENA and UAE Banks

Authors’ individual contributions: Conceptualization — A.A.M. and R.A.R.; Data Curation — A.A.M. and K.F.D.; Writing — Original Draft — A.A.M.; Writing — Review & Editing — R.A.R. and N.F.b.A.T.; Supervision — R.A.R.; Project Administration — R.A.R.; Funding Acquisition — A.A.M.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: G21, G34, O16

Received: 27.12.2023
Accepted: 02.12.2024
Published online: 06.12.2024

How to cite this paper: Mohammed, A. A., Ab Rahim, R., Ahmad Tarmizi, N. F. b., & Darkwah, K. F. (2024). Corporate governance and banking performance in the Middle East and North Africa region: An implication for the board of directors. Corporate Board: Role, Duties and Composition, 20(3), 115–127. https://doi.org/10.22495/cbv20i3art11